Episode 2 – AMI 2.0: The Next Phase of Grid Intelligence

Marc (00:42)
Today’s episode is titled AMI 2.0, the next phase of grid intelligence. Over the past decade, many utilities deployed advanced metering infrastructure, giving them new visibility into customer usage and grid operations. But technology and expectations have evolved very quickly, and a new generation of capabilities is emerging. Utilities are now beginning to explore what many are calling AMI 2.0.

Systems that go beyond basic meter data collection to support more advanced grid operations, deeper customer insights, and potentially much more sophisticated use of analytics and artificial intelligence. To discuss what’s driving this next phase of smart metering and what it means for utilities, I’m joined today by Kevin Hernandez, a partner and grid edge expert at ScottMadden.

Who works closely with organizations on grid modernization and advanced metering initiatives.

Marc (01:40)
Kevin, welcome to the ScottMadden Energy Exchange. For listeners who may not live in this world every day, let’s start simple. What exactly do we mean when we talk about AMI 2.0? Thanks, Marc. I think that’s a really good place to start. To be clear, there’s really no single definition for what AMI 2.0 is versus AMI 1.0. But generally speaking, we’re talking about the next generation of advanced meters.

That have more and really a different set of capabilities in the first generation of smart meters. They go way beyond just more granular metering intervals, such as hourly to 50-minute, to things like on-meter computing, apps that run on the meters. And what I think is really interesting is this connection to customers. So a lot of distributed intelligence functions and a lot of just new capabilities in general.

Marc (02:36)
this conversation picking up momentum right now? What’s changed that’s bringing AMI back into focus?

Kevin (02:44)
Yeah, well, a few things. So the first thing is that those early generations of AMI, the first generation of smart meters, those were deployed in the early 2010, 2009 timeframe. And a lot of those are just simply nearing end of life. So the meters themselves are beginning to age out. And so for the utilities that were early adopters and that had those initial meters on their systems,

They’re beginning to look at what replacements are those going to be, right? And so are they going to replacing those with something similar, maybe, you new models of something similar with similar capabilities, or are they going to be looking ahead and, and exploring some of these new, some of this next generation? And I think kind of coupled with that is this push that we’re seeing throughout the industry, right? This push towards a more data-driven grid that is really kind of pulling together and using data in a much different way than we were even just five and 10 years ago. So things like DER management and DERMs, smart devices, we really have a much more dynamic system. And so I think a lot of utilities are now looking and seeing how we move from this AMI 1.0 world and use the next generation of meters to fit into their overall kind of digitalization and what’s really becoming a data-centric grid management model.

Marc (04:11)
To understand where the industry’s headed, it’s probably helpful to take a step back and look at where utilities are today broadly in their AMI journey. Kevin, how would you describe the current landscape of AMI adoption across utilities in the US?

Kevin (04:31)
Yeah, sure. So, it’s pretty interesting when we look at the data; you see that the rollout of advanced meters really began in, like I said before, that kind of 2007, 2010 timeframe, uh, the early two 2010s. Um, and at the time AMI penetration was really quite small. was less than 5 % in the U S but by the time we get to 2022, we’re looking at penetration of over 77 %, and the biggest jump in that.

happened in between 2009 and 2011. So, we saw this real spike in adoption, driven by a couple of states. And I think that that’s an important distinction to make because AMI adoption really hasn’t been very even. It’s been very uneven across the US. In fact, in some places like Texas and California, good examples, we see meter adoption rates are well above 80% for residential and commercial customers. But in other places, AMI has really lagged.

New England, for instance, is notorious for low adoption rates. And penetration there, even today, is in some places in the high 20s, low 30s range, so percent range. So I think it’s like a lot of things in the clean energy transition, we’re seeing the really uneven adoption of different technologies across the space.

Marc (05:51)
Kevin, in some of our conversations, you’ve previously described three broad categories of utilities when it comes to AMI. Can you walk us through those groups? Because I found that a helpful way to think about it.

Kevin (06:05)
Yeah, absolutely. So kind of the way we see it is that the utility industry in the US falls into three kind of broad camps today. First, we have those that were really part of the early wave of AMI adoption, AMI 1.0 adoption in the 2007, know, 2010 timeframe. And those are the utilities now; they were on the leading edge. They were kind of the vanguard in terms of advanced metering in the US. And, those are the ones that are kind of whose meters are being in

they’re beginning to reach end of life, right? And so those utilities are starting to look at those fleets of meters out there and saying, okay, well, what’s next? The other group, or maybe the second group that we have, are utilities who began their AMI rollouts a few years later. And again, this is kind of state by state, but a lot of those utilities still have meters, know, fleets of meters that are midlife, right? And so these meters in some cases have another five or seven or 10 years of life left on them. And

The third category, the third camp is those that, for one reason or other, whether it’s, know, this state policy or, or something else, never really implemented AMI to begin with, or they implemented another technology such as AMR, AMR, and advanced meter reading. And so they really don’t have that legacy AMI 1.0 fleet out there. And depending on where they fall in these different, kind of categories, I think the approach to AMI 2.0 is going be a lot different.

Marc (07:35)
Yeah, at first glance, it might seem like the utilities that never deployed AMI are in the best position because they can skip straight to the next generation. But I know the reality is a little more nuanced. How should utility leaders think about their situation depending on which category they fall into?

Kevin (07:55)
Yeah. So, for those that are in that first category, right? Where they’re looking at what the next, what, know, what their next generation of meters is going to look like. I think they’re in a pretty good position, right? Cause they’re able they have an obvious replacement need. They’re going to be spending capital on either another traditional meter or another 1.0 meter or looking at something else. And so there’s.

a pretty good business case there to continue to capture the benefits they’re getting with their current generation of meters and potentially expand those. I know there are little more complications, and we’ll get into those details I’m sure as we go. But for those utilities that haven’t made that large investment into a legacy metering system or into an advanced metering system to begin with, they’re looking at this from a clean slate, and that can present some advantages too. They’re really, instead of having to work with a current head-end system and telecommunications, they may be able to design something from scratch that is better suited to the AMI 2.0. For those that are in midlife, it’s a little bit more complicated because they still have their existing fleets of meters. And so the question for them is how far out in time do they want to wait to make those investments? Is that something they can phase in now?

Or there was a little bit more decisions there a little more strategy I think for those utilities I would say that those that find themselves in that middle category Even if they’re still have some time left on their existing fleet. They should begin to look at what’s coming next or maybe some things they can do today However, that the one thing that I think will tie, utilities across the spectrum together though the thing that I think is common between them is that the

the that they need to have with the regulators is going to be very similar, which is what are the, what is the benefits that this next generation of meters is going to bring us? And, frankly, at the end of the day, what is the cost of that and how much do, to customers, want to pay for those types of investments?

Marc (10:02)
That’s a great point. I know that once utilities start thinking about upgrading or deploying AMI 2.0, the conversation quickly moves from technology to what is the business case. So one issue we’re hearing is that some utilities that deployed AMI 1.0, so one of your groups not that long ago, are considering upgrading before those assets reach the end of their expected life.

How is that complicating the business case for those utilities?

Kevin (10:34)
Yeah, it’s a really good question. I guess you could say that there’s a little bit of a steeper hill for them to climb in terms of making their business case, since the cost of that initial deployment may not be fully amortized or recovered. And of course, making the case irregular, you need to make new investments when your previous investments have not reached end of life, can be a difficult conversation to have. But I think one way that utilities who are in this category might consider moving forward, and I think the alternative of waiting five or 10 years for their existing meters to age out, is to begin a program of maybe strategic replacement, or to begin considering where there may be incremental investments that can be made that begin to prepare them for this, what really we feel is gonna be an AMI 2.0 world, a really a different environment that we’re working in.

While continuing to use the legacy meters in most cases. And I’ll just give you an example of what I mean here. For instance, a utility, know, meters are gonna fail, even if they are midlife; you’ll have some failing meters. And so maybe there’s an opportunity or a program to replace those, a small subset of those, with advanced meters, almost in a, maybe like a pilot sense or in a testing sense, right? And so we’re beginning to deploy those alongside.

The legacy fleet, and maybe those are not doing your heavy lifting in terms of meter-to-cash or billing, but they’re still out there for testing purposes. And in that time, you may have somewhat of a natural transition. And then by the time the entire fleet is beginning to age out, you’ve already got some infrastructure in place. Another example would be to deploy next-generation meters or AMI 2.0 meters to groups that maybe weren’t part of that initial deployment.

So not all cases were industrial/commercial customers, or even, in some cases, residential customers, part of the original AMI. And so is there a customer segment there that can be the guinea pigs, or can receive that deployment of advanced meters? Again, giving the utility an opportunity to begin to make some of those investments on an incremental basis, begin to get some experience with AMI 2.0 without having to wait for the entire legacy fleet to reach replacement age.

Marc (12:58)
Yeah, that makes sense. Kevin, how are regulators responding to that kind of proposal? Are they generally receptive to these upgrades even in a pilot sense? Or are they asking tougher questions? What are you seeing?

Kevin (13:14)
I think we’re at a place where there’s growing acceptance, or at least certainly more acceptance than there was five or 10 years ago. But historically that really depends on what part of the country you’re in. I think historically there’s this tendency among some regulators to be a little skeptical of the benefits that are being claimed in a lot of those AMI business cases. Particularly those early AMI business cases had a lot of potential use cases and benefits.

Unfortunately, many of those were in the form of better outage management, reduced truck rolls, reduced meter reading costs. A lot of those, in fact, majority of those types of benefits came to fruition and outweighed the cost largely. I think those original deployments of AMI were cost-beneficial, which helps now in having those conversations with regulators around AMI 2.0.

We will find ourselves, I think, in a little bit of a similar situation because we’re talking about these new types of use cases, these new types of benefits, particularly benefits that are going to be accruing to customers more directly than they were before. And so I think the challenge today is going to be that some of the same benefits that were claimed by AVI 1.0 are kind of off the table, right? Because those are already realized and those are not going to be duplicated. So utilities are really going to have to

engage with the regulators and have those conversations and be able to articulate why the investment is worthwhile for customers.

Marc (14:49)
When utilities do make the case for AMI 2.0, what are those big benefits that they’re pointing to that were not available with earlier deployments?

Kevin (15:00)
Yes, so one way I’ve heard this expressed that I like is that AMI 1.0 digitized the meter-to-cash process. Well, AMI 2.0 is trying to turn the meter into an upgradable grid edge computer, right? And so a much different way of thinking about this. AMI 1.0 enabled things such as remote reads, remote service switching, meter pinging, interval data for billing, and those largely.

As I mentioned before, provided their value through those avoided truck rolls and eliminating manual meter reads. AMI 2.0: what we’re really talking about there is this embedded grid edge computing and this whole host of applications now that can be deployed to the meter. So the meter becomes this edge computing device and provides both grid-facing but also customer-facing use cases. And I think that customer-facing piece is important.

For example, some of the utilities that we’ve spoken to are looking at grid edge applications like intelligent voltage monitoring, distribution, average detection, much more granular grid mapping, locational awareness, things like that. Safety analytics are always high on their list: temperature sensing, temperature monitoring, and arc sensing. So there’s a lot of attributes here, a lot of potential use cases. Another one we hear a lot more about that is pretty important, I think, in the industry is this idea of strategically managing, or more tactically managing rather, managed electrification, right? So where we have applications that are running on the meter, which are monitoring usage at a component level, things like the meter interacting with the EV, know, setting limits on EV charging kind of on premises or within the confines of that.

Those devices are doing so in real time, right? So we’re getting some kind of real-time edge management from a load perspective. So, I think the, maybe the key takeaway here is that the jump is not simply to more data, but we’re really getting to this kind of meter level and, and edge level analytics and these edge applications. And I think that the opportunities for those who unlock future capabilities and early capabilities for utility at large are pretty huge.

Marc (17:27)
I imagine being able to manage electrification in that way is, as you described, would help offset some of the capital investments that you need to make to facilitate it. If you can coordinate across some of those assets out in the network, you can take longer to upgrade a transformer or a substation or what have you to facilitate the electrification that’s happening.

Kevin (17:53)
Yeah, I think that’s right. And so I think when we talk about what these business cases look like, I think that the range of benefits, there’s an opportunity for that to be much more expansive, perhaps, than it was with our original generation of advanced meters, because they’re doing more things. It’s going to make those really challenging conversations have. But I think that those are going to be worthwhile, because we’re going to be able to realize a lot of opportunity.

Marc (18:23)
You’ve mentioned a lot of additional data. It’s a theme that comes up frequently in these conversations. Utilities have been collecting enormous amounts of information from AMI systems, but historically they haven’t always been able to fully use it. How does AMI 2.0 change that equation when it comes to actually using all that data?

Kevin (18:47)
Yeah, I think it’s interesting because I think with AMI 1.0, data was certainly a big piece of that, right? A big element of that. I think a lot of those early use cases and the benefits revolved around, there’s going to be this data that we’re going to be able to use. I think the consensus has been that data has really not been as accessible or as easy to leverage, or at least to turn into tangible benefits as we originally thought.

So, my hope is that, and I believe that, AMI 2.0 is going to unlock a lot of those things. I think that things like, virtual power plants and advanced demand response and we talked about managed charging for EVs and electrification. Those things are going to have really a growing role in the energy system. And I think that AMI is really going to be central to enabling a lot of those things. And I don’t think that would have been the case before that.

The technology has evolved. mean, it’s materially different than it was 10 years ago. And so I think that those things that maybe were theorized before are going to be practical and achievable today. I realized that everyone’s looking for this, a solid utility business case for AI and, 15 minute incremental disaggregated meter data looks like one of those things where, you you’re getting all this data and what do you do with it? Well, now we have opportunities, maybe with AI and machine learning and other technologies, to turn those into insights, to turn those into things that we can leverage and turn into tangible benefits. We’ve said for a long time in the industry that AMI has provided access to all this data and kind of no one can figure out what to do with it. But I think AMI 2.0 will not only add to that data significantly, but the big difference is we’re going to have those emerging technologies rather.

That will allow us to make sense of it and to deliver value from the data to utilities and their customers.

Marc (20:46)
We’re hearing a lot of discussion about AI and advanced analytics and the utility sector. Where do you see those tools delivering that value as you mentioned?

Kevin (20:57)
Yeah, I think this is an area of huge opportunity. Load forecasting, predictive analytics, real load disaggregation, asset health. There’s a lot out there that is possible if we have the data and if we have the data in a timely and accessible way, know, near real-time data. And we’re going to be dealing with just a vast number of inputs and sources for this. And so

making sense of all that is going to be key, right? Absolutely going to be crucial. You can think of a scenario in the past where we may have had a customer with an EV or electrical audio here or something else. And, an hourly interval, you’re picking up this load signal on, on, every hour, but how many times within that period of time are you missing a change in the, in the load or something happening or not happening? And so more granular intervals to be part of that.

But I think what we do with the data that we’re getting is going to be equally or even more important. Another point I’ll make is I think it’s important that the degree to which much of the processing of the data- there’s a lot of talk about that, right? What are we going to do with this data? Where are we going to process it? I think a lot of that was pretty interesting to me, at least, is that a lot of this could be happening on the device. And today we don’t see that, right? Today you’re going to have to bring that data over.

From your AMI 1.0 meter, you’re going to have to bring it over; you’re going to have to house it somewhere in some sort of data lake or data warehouse and do some on-premise analytics with that. A lot of the promise from AMI 2.0 meters is that there’s going to be this edge computing capability in those applications that are running on the meter, right? And so we talked about this with the EV and managed charging; maybe that’s happening almost automatically there. And what kind of analytics and what kinds of controls and things like that are going to be happening there?

on the meter itself at the grid edge. so that’s, think that’s our, know, one of those really interesting things for me. The other thing I’ll say about that is that you talk to AMI 2.0, know, meter manufacturers and some of the developers of these different apps, one thing they talk about is over-the-air updates and things like this. So, there’s, there’s a hope that these meters also have have a lifetime or have the ability to adapt over time. So as we get

We kind of reduced some of the obsolescence issues. As technology continues to evolve, the meter is going to be able to evolve with them.

Marc (23:24)
Kevin, I know that utilities have already learned a lot from that first wave of AMI deployments. For those that are considering 2.0, what are the lessons that they should take from that first generation of AMI deployments and apply to what they do next?

Kevin (23:43)
Yeah, there are a lot of lessons, right? And that first generation of AMI deployments, and I think this is an opportunity for utilities that have not yet committed to an AMI ecosystem. That first generation oftentimes were required by the meter vendors or the different vendors there to adopt this packaged ecosystem of the communication network and head-end system and the meters themselves. And in many cases, those were proprietary, or they just weren’t interoperable with other components. And so you found utilities found themselves kind of locked into a particular ecosystem that was not interoperable with others. And there’s been a big shift in this in the last few years. I think that everyone, generally speaking, recognizes that moving away from a closed metering ecosystem to

more interoperable systems where the meters, the communications networks, the data management system, et cetera. All of those things are able to interact with one another. And so you’re going to get a little bit more, or hopefully a lot more, à la carte opportunities for utilities. That means choosing infrastructure and choosing meters and choosing data management systems, et cetera. Those things, based on the use cases that you find are going to be most applicable to your system, and that best interact with your other grid management systems, things like your DERMS and other things. So I think that that may provide some advantage to those utilities that are starting fresh, but I think for those utilities that already have AMI infrastructure, hopefully that interoperability allows them a path to upgrade and evolve to AMI 2.0 without having to switch everything out.

Marc (25:33)
If you’re a utility executive thinking about this today, what signals should you be watching that indicate it might be time to move toward AMI 2.0?

Kevin (25:45)
If your utility whose early AMI deployment is ending your life, so our bucket one that we talked about before, clearly now is the time to begin looking at whether or not those meters are going to be replaced with something similar or comparable to what you already have, or whether or not you’re going to transition to a more capable meter. I suspect that most utility executives are looking at what the opportunities and the benefits are from those.

Those advanced meters or the next generation of advanced meters and exploring those options. I think those utilities tend to be in a good position. I think they have a solid business case. They clearly have a replacement cost of their legacy meters to add into that. They have the additional benefits that we talked about before. But even for those utilities that are not, that are probably not approaching this transition in the near term or immediately,

I do think that now is the time to begin having conversations with your regulator, have conversations with peers about their experiences, and begin this conversation in your states and with the regulator in particular. I think it’s also not too early to begin organizing internally and developing a sense about what are the use cases we think, what are the things that we see value in our current AMI system, what are the things that we wish we could do but we can’t.

What are the things that we see on the horizon we may want to make investments in? What are the challenges that you’re seeing on your system and that you think that advanced metering or the next generation of advanced meters could be a solution for? So think there’s a lot of things that utility leaders should be looking at.

Marc (27:27)
If we’re looking ahead five to 10 years from today, what role do you think AMI will play in the broader evolution of the electric grid?

Kevin (27:38)
Yeah, I think it’s going to be fundamental. And I think this, you we’ve talked about the data, we’ve talked about, the edge computing. I think we’re really looking at a transition point or inflection point in the industry from a data perspective. I think that data is going to be at the center of everything we do. I think it’s going to be at the center of planning operations, customer interactions- can’t emphasize enough. Customer.

engagement with their energy use, I think is going to be, has the potential to be transformed. And all of that is going to be originating at the meter. And so I think, in some cases, we’re going to see that data not only originating there, but the customer is going to be interacting with that data, utilities can be interacting with that data. And I think in some cases, that data is going to be, like we talked about before, kind of being acted on, on its own, or operating within the meter itself. think that utilities that have access to that quantity and quality data are going to be able to integrate that and maybe not even be able to, but will need to be able to integrate that into their operations, and I think those utilities are really going to be light years ahead of their peers.

Marc (28:47)
If there’s one takeaway you’d want utility leaders to remember from this conversation about AMI 2.0, what would it be?

Kevin (28:56)
That’s a good question, Marc. I think that this transition, the one from AMI 1.0 to AMI 2.0, I think it’s more than just this incremental step in metering. You we, we, with, you AMI 1.0 to 2.0, and it just seems like it’s just this incremental evolution, but I think it really is going to be transformative. And I think it’s going to be a transitional step to what will really be a new phase in the utility industry where the data

we really have access to the data that we’ve needed for a long time. We also have this convergent with methods, with the computing power, that particularly at the meter itself and all those things are going to come together, I think, and hopefully give the industry a lot more capabilities to model, plan and operate the electric system in a way that we’ve talked about for a long time, but maybe have not really had the, the tools or technology to do. I, I really think that this is a transformative technology, and what we do with that is going to be defining for the industry for the years to come.

Marc (29:59)
Kevin, thanks for joining me today. Really appreciate you sharing your insights on the next phase of grid intelligence.